Orkla is now losing market share, primarily due to chains own branding (EMV). Historically, Norway has had a lower share of EMV than comparable countries. However, Nettavisen writes that 80 percent of ground beef is store-bought brands.
In April, private label brands accounted for about 17 percent of Coop’s total of 16,000 items. The ruling parties Ap and Sp are considering tighter regulation of EMV. Budget partner SV wanted to ban the goods.
We see broadly that we are losing market share to EMV across all markets. It applies to both
– We see that the trend of EMV sales is increasing. Grocery chains are what set store prices for both our goods and EMV, adds Executive Vice President of Communications Håkon Mageli.
In other words, Orkla believes that chains such as NorgesGruppen, Rema and Coop price their goods favorably compared to those of their suppliers.
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international trend
Families now consciously choose lower price chains when shopping.
— we saw the trend come first in the Czech Republic and then in Denmark, and we saw that strongly in Sweden in the first quarter. The trend continues in all three countries.
– In Norway, store chains have a slightly different format. Orkla’s boss says there are more “tough” low-priced chains in other countries than in Norway.
Lidl is a typical example of such a “hard” chain. In Norway, chains such as Kiwi, Rema and Coop Extra are somewhat “softer” and not as polished in price and product selection.
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Great contrast
– Are there specific Orkla product groups that this change applies to?
No, there is a big difference. For a group like chocolate, we don’t notice that much. If you want Stratos, you can buy them. So it’s important that we continue to reduce costs during a period like this. Then the need for price increases will be as low as possible.
– We must also continue to invest in our brands so that consumers keep coming back. Selte answers We have to be the best in terms of taste and other important reference points for consumers when they make their choices.
Check out the sizes
But the CEO still has concerns. Orkla has a lot of international business, as does the important branding area Orkla Foods Europe.
The region consists of large companies in Norway, Sweden, Finland, Denmark and the Czech Republic. Orkla lost volumes in the first six months of the year.
The markets where we saw the biggest declines were Denmark, the Czech Republic and Sweden. Here we see that consumers are shifting from supermarkets to lower price chains. We don’t see this pattern very much in Norway, Celti says.
On Friday, Orkla delivered good results that the exchange knew its worth. The stock ended up with a whopping 5.16 percent. The good result is primarily due to the high price. However, the food giant is concerned about the sharp increase in prices and the increase in interest rates. It is now affecting the purchasing power of households.
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It affects purchasing power
– The concern applies to all of our markets. Interest rates are rising, and electricity prices are still high. All other items cost more. It affects the purchasing power of consumers, and this worries us, and it probably also worries other companies in the trading industry.
– I am worried about the general rise in prices, and that it will take a long time for it to go down. There are also signs that it will be a dry summer in Europe this year. For many of our raw materials, such as grains, berries and vegetables, it affects input factors. This also affects prices.
– and heavy ingredients such as meat and dairy, Mageli chimes in.
There is still underlying cost pressure, says Celti. Orkla also has a contract period of three to nine months for the goods they buy. Cost increases occur at slightly different times.
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not represented
Selte believes that one should not stare blindly at the United Nations Food Index (FAO index). This indicator apparently shows a decrease in the prices of a wide range of products.
Prices haven’t fallen as much as the market thinks. The FAO index is not very relevant to our markets. We continue to see significant cost increases in some areas.
The prices of sugar and cocoa are skyrocketing. Some packaging continues to increase in price, and packaging is an important investment factor for us, says Orkla President.
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